An AMD Turnaround? Not According to NVIDIA's Earnings

While Advanced Micro Devices (NYSE: AMD  ) reported strong demand for its GPUs during its last earnings conference call, NVIDIA's (NASDAQ: NVDA  ) earnings results throw cold water on the idea that AMD is regaining any considerable market share. NVIDIA released preliminary results two days early showing a 16% rise in revenue and an 85% jump in EPS. But its full results paint a picture of a company completely unaffected by AMD's turnaround efforts.

Strong growth continues for NVIDIA
NVIDIA's GPU revenue, which is comprised of both GPUs for the PC as well as the company's enterprise offerings, rose 14% year over year during the first quarter. GeForce GTX gaming GPUs grew by 57% year over year, faster than the 50% growth during the fourth quarter. High-end notebook GPUs performed well even as the underlying notebook market declined. NVIDIA launched Maxwell-based notebook GPUs during the first quarter, and an increase in energy efficiency -- combined with substantial gains in performance -- gave NVIDIA an edge over competing products.

AMD reports its GPU business along with its console business, and the company didn't give detailed numbers on GPUs alone. But with NVIDIA's reported growth, it's hard to imagine AMD picking up meaningful market share.

One area where AMD claimed to be winning market share was the professional graphics market, but NVIDIA's results cast some doubt over those claims. NVIDIA's Quadro line of professional graphics cards grew during the quarter, and NVIDIA claimed in its conference call that its workstation market share is at its highest point since 2010. There is certainly a margin of error here, but it's safe to say that if AMD picked up market share during the quarter, it wasn't very meaningful.

Of course, AMD is in the early stages of its turnaround, and while growth in the gaming and professional GPU markets can drive growth at both AMD and NVIDIA, it doesn't appear that AMD's efforts have made a dent in NVIDIA's market share. NVIDIA's sole focus on graphics -- contrasted with AMD's attention being spread between CPUs, GPUs, semi-custom deals, and servers -- gives reason to believe that NVIDIA will remain the market leader for the foreseeable future.

Beyond gaming
NVIDIA's enterprise products, namely Tesla and GRID, also grew during the quarter. GRID, NVIDIA's graphics virtualization platform, is now being trialed by nearly 600 enterprise customers, a number which is up 35% since the fourth quarter. While GRID is a very small part of NVIDIA's business today, in part due to the typical trial period of six to nine months, CEO Jen-Hsun Huang expects GRID's growth to accelerate going forward.

Tesla, NVIDIA's GPU that's aimed at the supercomputing market, also has plenty of potential for further growth. While the high-performance computing market has been the main aim of Tesla so far, the rise of big data has presented further opportunity for the Tesla business to grow. Because big-data analytics calculations are easily parallelized, GPUs are a natural fit to accelerate these types of calculations. NVIDIA announced a partnership with IBM late last year that put NVIDIA's Tesla hardware inside of IBM's servers in order to accelerate its enterprise software, and with IBM increasingly focusing on big data, NVIDIA's Tesla is at the doorstep of a whole new market.

Tegra, NVIDIA's mobile product that has been responsible for the company's declining earnings in recent years, saw its third quarter of sequential growth, as demand from the automobile market boosted revenue by 35% year over year. CEO Huang seemed very confident during the conference call about the potential of the Tegra K1, the newest iteration of the mobile processor. With a narrow focus on getting the chip into devices where graphics and visual computing matter, Tegra is on its way to eventually becoming profitable.

The bottom line
While AMD's recent results suggest that things are going well for its GPU business, it doesn't appear that NVIDIA is being negatively affected at all. In both gaming GPUs and professional GPUs, NVIDIA grew revenue, and it's unclear if AMD managed to pick up any market share. NVIDIA's enterprise and mobile products also grew, and the 85% increase in EPS was at least partly driven by smaller losses in the Tegra division. NVIDIA had another strong quarter, and it doesn't look like this trend will change anytime soon.

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  • Report this Comment On May 14, 2014, at 12:16 PM, H2323 wrote:

    Except for the horrific guidance. Come on this article is a joke, you sound like Jen-Hsun Huang=sketchy.

    AMD and Intel are clear as day hitting Nvidia GPU sales with integrated graphics, which on AMD's books will show under CPU sales. If you don't want to believe that you are losing your mind. The PC space for Nvidia is weakening which is why they are diversifying as fast as possible. AMD is also very competitive in traditional graphics cards from professional to entry.

    Nvidia will contract just like everyone else in the PC space with the exception being Lenovo, maybe, most already have contracted, those are the buys.

  • Report this Comment On May 14, 2014, at 2:43 PM, mycardbrokedown wrote:

    a few side notes:

    Author only mentions:

    GTX line & Quadro line

    No entry level mention

    No tegra sales mention

    No tesla sales mention

    Nvidia hardly sells ANY entry level right now intel and AMD ate its lunch there with the new combo chips.

    Tegra is and will allways be too little too late. And if it increased sales it did so because Nvidia is basically giving shield away for free just to justify the existance of tegra

    Tesla is majourly hurt by intels MICs and now by AMDs firePro line.

    So mr. "journalist" next time look at the broader spectrum.

    Nvidia sold more GAMING GPU's compared to some not so great years which is good but that market is tiny

    Nvidia sold more Quadro GPU's which is again good but this is also a small market. And they have the edge on partner integration... edge that is quickly evaporating as AMD makes deeper and deeper inroads with pro graphics software provider see new mentro graphics colaboration. Not to mention that power mac uses AMD instead of the traditional Quadros.

    In the server space mostly Intel has chopped of more and more of the tesla market and now AMD is getting some of the pie too.

    To claim that AMD is the ONLY opposable company to NVIDIA shows how little you know about the market. What you fail to see is that AMD got really serious about professional graphics (workstatisons & server) in 2013 when it appointed saphire to lead the channel and now more and more deals with various software stack providers surface.

    Nvidia is in big problems right now to say it is a buy is unethical and really stupid. This company needs to re-evaluate and diversify it's income or else it won't be able to survive for much longer. They have very good high-end products don't get me wrong, but as you might know (or not) companies that only focused on high-end products end up as a department in another bigger company.

  • Report this Comment On May 15, 2014, at 11:12 AM, MrClean wrote:

    Good read Timothy Green,

    Nvidia has the best GPUs on the planet with great driver support that own high end gaming graphics on the desktop and laptop. Nvidia's Tesla has been for years dominating the pro workstation market and will do the same in the server market, teaming up with IBM is just the start. Nvidia's GPUs run cool and quiet not like AMD hot watt sucking GPUs. AMD's APUs are over hyped, over priced lame gaming bottle necking waste of time and money. Gamers are much better off with a Intel CPU and a discrete GPU giving you future proofing upgrade options when needed.

    Xiaomi CEO Lei Jun announced the MiPad sporting Nvidia's Nvidia Tegra K1 SoC and many more wins will be coming. Maxwell has performance per watt advantage that AMD can't match especially in mobile laptops and up coming Steamachines. Debt laden AMD is Geforced to sell their chips cheap just to keep the lights on. Intel and Nvidia command a premium price with their superior performance while AMD lifeline are cheap toy console that will be made obsolete this year and next.

    Debt laden AMD is caught in the R&D crossfire and just can't compete, they sold their mobile GPU IP to Qualcomm and are now absent from the mobile handheld market that thrives on performance per watt efficiency that AMD lacks.

  • Report this Comment On May 15, 2014, at 12:23 PM, Beerfloat wrote:

    No need to hate on Jen-Hsun just because he keeps beating the snot out of AMD.

  • Report this Comment On May 15, 2014, at 12:24 PM, jwtrotter wrote:

    Well, mycardbrokedown can'r seem to read but that's okay. He seems to ignore how Tegra is sequentially growing and going into markets AMD will never touch . . but he can cut and paste his standard rebuttal all he wants. The author here was more accommodating of AMD then in other articles actually and simply states a solid objective case that AMD's recovery isn't really making the kind of dent they hope for with Nvidia. Really, it woul dbe nice to see some AMD investor with some sense of reality speak in a more judicious way than most of the posters do here with the Fool articles.

  • Report this Comment On May 15, 2014, at 12:31 PM, wownwow wrote:

    AMD's turnaround = f(AMD's minding and growing its own business) != f(nVidia's business).

    But nVidia is doing well with 24 cents a share vs. a few cents of AMD.

  • Report this Comment On May 15, 2014, at 12:45 PM, keeperoftheq wrote:

    The author has it all wrong. 24 million game consoles will be sold in 2014 with AMD making a profit of $15 on each unit sold. That is 17 million more than were sold in 2013 bringing in $255 million more in profits than in 2013.

    Console sales are so strong that Global Foundries and TSMC both will be making the APU's for them.

    Remember Q4 sells as many consoles as the other 3 quarters combined.

    GPU sales were so hot from the cyber coin minors that gamers and the DYI crowd were left with no choice but buy cards from nVidia. Starting in Q2 Global Foundries were added as a second source. Both GF and TSMC will be making see cards. This will greatly increase sales and that spells trouble for nVidia.

    AMD is forecasting PC growth for every remaining quarter in 2014. With PC sales declining, the only way to grow revenue and earnings is new design wins. This spells trouble for nVidia.

    In fact starting with q2 you will see growth and profits in for the remaining quarters of 2014 in every segment. This spells trouble for nVidia.

  • Report this Comment On May 15, 2014, at 2:23 PM, guluj wrote:

    Nvidia Earnings, some of the articles posted here to put down the AMD's stocks sounds like yells of desperation. It is pretty clear that Nvidia will loose this battle of pc graphics over time because APUs are here. That is 30% of Nvidia's revenue. Nvidia will probably be cornered to gaming and professional graphics segments with mobile part being extremely competitive. AMD does seem to play its cards very well finally with the strength of IP it has. Market share for APUs, Professional Graphics, Gaming, Mobile, and Servers will steadily improve with custom chips being the wild card. Some of the articles on the short side on SA and MF do not even sound honest.

  • Report this Comment On May 15, 2014, at 3:37 PM, Mark2013 wrote:

    It's totally illogical to continue to base anything about AMD on NVDA because AMD is no longer a one game company of chips.

    AMD is becoming exactly what I predicted back at the five year low; a lean, mean operating machine of diversification with its new CEO who was with IBM before.

    Not only does AMD have a price target opinion of $15 now but I still state emphatically it is going to the $20s and it's been a long time since AMD traded in the 20s but is going to happen imo so with AMD one gets real profits per share long in a company that is moving away from this other company and is going to be much bigger and more powerful and will probably just buy NVDA out before this is over shocking many who seem to have this obsession going that NVDA is either bigger, better or what it does has an effect on AMD. That was the case five years ago and even two years ago but not for a long time now. JMO

    My disclosure is I am long AMD and of course must disclose experience in the markets going back to 1980 so there is no mistake that I have an advantage here based on vast experience in the markets. See you guys in the 20s on AMD. The other company is not going up hundred of percentage points in share price imo and is starting to look more like a one trick pony imo

  • Report this Comment On May 15, 2014, at 5:24 PM, mycardbrokedown wrote:

    jwtrotter ... I said:

    "Tegra is and will allways be too little too late. And if it increased sales it did so because Nvidia is basically giving shield away for free just to justify the existance of tegra"

    So... it's touching what? The only device tegra powers and has some volume to it is shield and that only because the GFX cards and the vouchers pull it up.

    Typical nvidia fanboy with 0 knowledge of the market, making "smart" comments.

    Having growth in very thin niche markets is 0 when you draw the line.

    How about we compare revenue & profit per company. And then compare the cache ballance sheets. AMD started this year with a 2.1 BN in debt. Nvidia with money in the bank. At the end both made it into black one more then the other. Nvidia is a very good company and they do have topnotch products.

    Problem is they are becoming obsolete from any and all high volume markets they are on. Intel & AMD are stealing both its low-mid range consumer market and server range not to mention the consoles.

    With the next generation apu's the only viable market for nvidia will remain hardcore gaming and the more traditional quadro(pro line)... both are niche markets as more and more gamers will realise that they don't need a humongous gpu to run the games and that an apu or an intel equivalent will do just fine for their needs... This will leave them with basically one single line which AMD wants to get too: Quadro. It will take years for NVIDIA to lose the pro line market as it is a very "traditionalistic" market but with the kind of deals & hardware AMD is pushing lately I give NVIDIA about 3 years before going below 50% of the pro market. Also they almost abandoned one of their better strategies lately ("nvidia, the way it's meant to be played").. WHY??? I get it with consoles, low margins they did not need the business, AMD needed the business to save it's bottom line... but why did they give up on the campaign that was almost as powerful as "intel inside"!!??

    About games, I talk from experience:

    HD | fullHD:- bioshock, stalker, crysis, bf4 and many many other games run smooth, some even maxed out on an APU from AMD... why would the non hardcore gamer EVER need more then that?

    So what will nvidia do next gen of apu's/i7s? What will it sell then? When the apu's gpu performance has increased every generation by leaps and bounds.(same with intel).. GameWorks? Really ... come on both AMD and Intel will just overpower with hardware any deficiencies and it will all be for nothing.

    What will nvidia do when both amd and intel are taking one of the most aggressive stances towards the mobile markets in ages. Intel is giving chips away basically and amd has just shown that it can trounce any competition in a 4W TDP. The only thing separating arm from intel & amd is better idle & phase control which will come with the next gen(H1/2015). Then we'll see a true battle of the midgets. BTW a snapdragon (S4/S5/note2&note3) has an estimated TDP of 5-6W because that's round about what it uses when pushed to the max.

    X86 architecture is much more powerful c4c and if intel and amd manage to squeeze a 4W TDP quad core chip into a phone/phablet (And Samsung has announced devices with mullins btw) with good power management even if the battery is only good for like 3 days it would be enough! Many will LOVE to get their hands on real desktop features from a phone that they can plug into a home or office hub and always have on them.

    If you've been following AMD there are lots of things that show a huge turnaround besides the obvious balance sheet:

    AMD - Hynix

    AMD - Apple

    AMD - Microsoft

    AMD - Mentor graphics

    AMD - Sony

    AMD - Oracle

    AMD - Saphire

    AMD - various game studios

    AMD - Samsung

    AMD - Lenovo

    AMD - Bluestacks

    etc...

    All these collaborations and the results there after are indicative of a much more active AMD much more active then we have ever seen in its history...

    Sorry to burst your bubble but all these companies can't be wrong... just because you can pick the positives for NVIDIA... that's just ignorant.

    And now the outlook:

    And just on the horizon is Samsung & Glofo which will profit from IBMs research and bring 14nm in 2015 to market half a year after intel and half a node in front of it... If this means great things for AMD ... well gee I don't know... MAYBE???! Will NVIDIA be allowed to buy from GLOFO? Probably... will it? Probably not...

    The way AMD moves right now I would not be surprised if at one point AMD would design custom powerX chips under IBM license and stomp all over the server space...

    Also Java on HSA could mean huge businesses could move onto hiperdense servers powered by low power apus delivering a datacenter worth of compute power in a rack.

    Stacked GPU's could deliver a very simple graphics card with easy to manage power & thermals (as there is one chip to feed & cool)... Meaning that we might see lower power variants of these kind of chips accompanying hiperdense apu's for added business & power.(gen1: up to 8GB @ 512GB/s... second gen: 64GB@2TB/s). These monsters could devastate the server space. And soon after, APUs with such memory on top could be huge compute power houses for the business range.

  • Report this Comment On May 15, 2014, at 7:49 PM, MrClean wrote:

    Conclusion

    The Kaveri brings about a few innovations and technologies like hardware HSA support, but most of them offer no real benefits right now.

    Promoting the Kaveri series to the desktop market, AMD puts an emphasis on several things such as the Steamroller microarchitecture with allegedly higher efficiency, the fast graphics core with GCN architecture, HSA support for heterogeneous computing, and affordable pricing.

    However, these advantages are all very questionable. The new Steamroller microarchitecture ensures but a small performance growth which is negated by the reduced clock rates of the new APU models. As a result, senior Richland-based APUs are even faster than the new Kaveri in terms of x86 performance.

    The potentially fast graphics core is limited by the low memory bandwidth. The A10-7850K has a third more shader processors than the A10-6800K but its actual gaming performance is only 10% higher. It goes without saying that the Kaveri’s integrated graphics is superior to any other, yet it still cannot ensure a playable frame rate in any game at the Full-HD resolution even with low visual quality settings. It must be granted, though, that the A10-7850K delivers a high enough frame rate at 1920x1080 in a number of popular games including some online ones.

    As for HSA, the related hUMA and hQ technologies look highly promising but it'll take a lot of time until they become practically applicable. With the current implementation of heterogeneous computing the Kaveri series aren’t any faster than their Intel competitors. The OpenCL support is but rarely implemented in modern applications. Besides, Intel’s APUs benefit from it just like AMD’s, so this doesn’t change the overall picture.

    For all that, AMD prices the A10-7850K very high, pitting it against junior Core i5 models which are actually much faster except when we use the integrated graphics. That’s why the A10-7850K seems only to be interesting for users of compact entry-level gaming.

  • Report this Comment On May 15, 2014, at 8:38 PM, rav55 wrote:

    @Timothy Green

    There is a nice little piece over at Seeking Alpha that provides FACTS and FIGURES that completely debunks your little endeavor at FUD.

    AMD has increased it's market share to 30% due to the MacPro which is outselling the capacity to produce it.

    However the other little fact that you are ignoring is that Professional Graphics segment only accounts for about 7% of AMD's total valuation.

    Your attempt to generate fear, uncertainty and doubt has failed.

  • Report this Comment On May 15, 2014, at 8:42 PM, rav55 wrote:

    @ Timothy Green

    Oh yeah I almost forgot. Where is nVidia GeForce GTX Titan Z?

    Is it lost? Perhaps you know where it is? You seem to know everything else.

    The very point of nVidia's spear is missing!! Seems that they have a little trouble executing.

    Can't gain market share if you don't bring product to market!!

    GeForce GTX Titan Z is a MASSIVE FAILURE!!!

  • Report this Comment On May 15, 2014, at 10:35 PM, rav55 wrote:

    @ Timothy Green

    GeForce GTX Titan Z the POINT of nVidia's spear!! Dead on Arrival!!

    In fact it is so embarassingly bad at 2x the price that nVidia took it off the market. What a joke.

    How does that FACTOR into your idiotic piece?

    nVidia also enjoyed some increased sales early in late 2013 and 2014 because AMD was too busy SELLING RADEON to the Crypto-currency demining crowd.

    And we all know that nVidia gpu's SUCK at crypto-currency demining.

    Well that opportunity is NOW CLOSED to nVidia as AMD has increased production of that discrete silicon.

  • Report this Comment On May 16, 2014, at 2:58 AM, Beerfloat wrote:

    "nVidia also enjoyed some increased sales early in late 2013 and 2014 because AMD was too busy SELLING RADEON to the Crypto-currency demining crowd.

    And we all know that nVidia gpu's SUCK at crypto-currency demining."

    Man, it's hard to keep up with tech.

    Is this demining the new thing now that the mining fad is history?

    And do they transport the Radeons to a safe place or do they detonate them on the spot?

  • Report this Comment On May 16, 2014, at 3:14 PM, H2323 wrote:

    Nvidia graphics up 14% annually...flat guidance Q2

  • Report this Comment On May 16, 2014, at 3:15 PM, H2323 wrote:

    AMD graphics up more then 100% annually...increased guidance Q2...pretty simple

  • Report this Comment On May 16, 2014, at 4:34 PM, TEBuddy wrote:

    So because nVidia sales increased, that means AMDs sales could not have increased more?

  • Report this Comment On May 17, 2014, at 1:16 AM, rav55 wrote:

    @Beerfloat

    Ah you made a funny. I've been writing too much lately regarding UXO demining for other isues that it was a slip of the keyboard.

    But pointing out my typo doesn't refute my argument.

    The inflation of Radeon prices due to crypto currency mining did give nVidia an opportunity at the end of 2013. but that opportunity is over as AMD has increased production across the board AND lowered prices. Another headache for nVidia margins.

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